Wednesday, July 8, 2009

ISDA sends a letter to the House on the sneaky provision in the Clean Energy Act

The recent American Clean Energy and Security Act of 2009 that passed in the House contained various provisions relating to derivatives (that had nothing to do with carbon emissions).

The Senate current bill on climate change (which has not yet passed) contains no provisions on derivatives. It is not clear what the administration's position is on this point.

ISDA and various other industry bodies requested that the provisions be removed but were ignored.

[These provisions] will adversely affect the ability of American businesses to manage risk and control funding costs through the use of the derivatives markets. ...

these provisions should not be considered by the House as part of the climate change legislation. We ask that Sections 341 and 351-358 be removed from H.R.2454

ISDA is gearing up for a campaign to educate Congress on the nature of CDS - in particular "naked CDS" - with the hope that whatever decision is reached will be a fully informed one.

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